New gas wells on the horizon

Marathon has 5 projects for 2006

Posted: Thursday, August 03, 2006

By TIM BRADNERMorris News Service  Alaska

Marathon Oil Co. will bring three new Southcentral Alaska natural gas projects into production in 2006, the company said July 13. Total new production is expected to range between 20 million cubic feet/day to 30 million cubic feet per day from five new wells, Marathon’s Alaska manager John Barnes said.

Some of the new production will be shared with Chevron Corp., Marathon’s partner in one of the projects, Barnes said.

Marathon produced 67 billion cubic feet in Alaska in 2005, an average of 183.6 million cubic feet per day. Barnes said the new production could increase Marathon’s net Alaska production by approximately 12 percent, since some of the gain will be offset by declines in existing producing assets.

Overall, the new production will amount to a significant increase for Cook Inlet, where gas reserves are declining and there is concern about future supply. A total of 208.3 billion cubic of feet of gas was produced in Southcentral Alaska in 2005, or about 570 million cubic feet per day.

Production in the region has stabilized in the last two years after showing significant declines because of increased exploration and development that resulted in enough new production to offset declines in older producing fields.

Marathon’s new 2006 production, however, could result in a significant increase in gas production in the region for the first time since 1996.

Barnes said new wells drilled in the Ninilchik gas field on the Kenai Peninsula, 60 percent owned by Marathon and 40 percent owned by Chevron, will contribute to new production. Production will begin in November from two new production pads with two wells.

The second well is now being completed, he said.

Additional production will come from Marathon’s 100 percent owned Kasilof gas field, a new project that will begin production in the fourth quarter of the year. Construction is nearing completion on a 4-mile, 8-inch pipeline that will connect the Kasilof gas field with the 12-inch Kenai-Kachemak Pipe Line owned by Marathon and Unocal.

The small Kasilof field is an offshore deposit drilled with an extended-reach well from shore. Production will initially be through one well, Barnes said. The company will assess reservoir performance before deciding on any additional drilling.

New production will also come from an old well pad redeveloped in the Marathon-owned Cannery Loop gas field. A new well was drilled earlier this year, and a second well is planned later this year, Barnes said. First production is expected in September.

Cannery Loop is an small gas field developed by Unocal  now Chevron  and sold to Marathon in the mid-1990s as part of a larger exchange of Alaska assets between the two companies. Marathon began redevelopment of the field in 2001.